Enbridge Inc. (ticker: ENB) and Spectra Energy Partners, LP (ticker: SEP) announced today their execution of a definitive agreement resulting in Enbridge converting all of its incentive distribution rights (IDRs) and general partner (GP) economic interests in Spectra Energy Partners into 172.5 million newly issued SEP common units.
As part of the transaction, all of the IDRs have been eliminated.
The 172.5 million newly issued SEP common units have a value of approximately US$7.2 billion, based on the volume-weighted average price of SEP common units over the past twenty days.
The transaction value represents a multiple of 15.7x forecast 2018 GP/IDR cash flow and is expected to be breakeven to SEP’s distributable cash flow per common unit by the second half of 2019 and be accretive thereafter.
Enbridge now holds a non-economic GP interest in SEP and owns approximately 403 million SEP common units, representing approximately 83% of SEP’s outstanding common units.
The previously announced Enbridge/Spectra Energy merger is expected to close Feb. 27, 2018.
Another IDR elimination
On December 15, 2017, Marathon Petroleum Corp. (ticker: MPC) and MPLX LP (ticker: MPLX) announced a definitive agreement for MPC to exchange its general partner (GP) economic interests in MPLX, which included incentive distribution rights (IDRs), for 275 million newly issued MPLX common (LP) units valued at approximately $10.1 billion based on the volume-weighted average price of MPLX over the past 10 days. Coverage can be found here.
